Investigations of Improper Activities by State Agencies and Employees
Conflict of Interest, Violation of Post-Employment Ethics Restrictions, Waste of State Funds, Misuse of State Resources, and Incompatible Activities

The Governor of California
President pro Tempore of the Senate
Speaker of the Assembly
State Capitol
Sacramento, California 95814

Dear Governor and Legislative Leaders:

Pursuant to the California Whistleblower Protection Act, the California State Auditor (State Auditor) presents this investigative report summarizing investigations concerning allegations of improper governmental activities that were completed between January 2016 and June 2016.

This report details seven substantiated allegations involving several state agencies. Through our investigations, we found conflict of interest, violation of post‑employment ethics restrictions, waste of state funds, misuse of state resources, and activities incompatible with state employment. In total, we identified $397,000 in gifts not disclosed and in wasted funds related to improper travel expenses and mismanagement.

For example, a district engineer for the State Water Resources Control Board (State Water Board) violated state conflict‑of‑interest law by repeatedly recommending that the State’s drinking water program enter into funding agreements and approving claims for payment involving an engineering firm that employed the district engineer’s spouse. Specifically, from 2010 through 2015, when the district engineer first worked at the California Department of Public Health and then at the State Water Board, the engineer participated in a total of 59 decisions that involved the engineering firm, including approving claims for payment that resulted in the engineering firm receiving payments totaling $3.9 million.

In addition, the California Department of Transportation (Caltrans) failed to properly manage a mobile home park in the San Joaquin Valley that it purchased in late 2010. As a result, the tenants of the mobile home park collectively owed the State almost $315,000 as of December 31, 2015, an amount composed of overdue rent, late fees, and unpaid utilities. In addition, Caltrans failed to evict two individuals who have illegally occupied mobile homes in the park for the last one to two years.

State agencies must report to the State Auditor any corrective or disciplinary action taken in response to recommendations made by the State Auditor. Their first report is due no later than 60 days after we notify the agency or authority of the improper activity and monthly thereafter until corrective action is completed.